Best approach for XSLT on XML File Layout Object?

I have existing XML File Layout Object that I want to apply a XSLT transformation against.   Within the App Engine process,  I am converting the file to a string, building my XSLT string, using TransformEx function to change, and then writing the updated string out to new file.  See simplified:

Local string &xmlStr = &MYFILE.GetString( True);

Local string &inXSLT = "<?xml version=""1.0""?><xsl:stylesheet xmlns:xsl=""htt..."" version=""1.0"" >  etc, etc, ";

Local string &xmlStr_OUT = TransformEx(&xmlStr, &inXSLT);

&MYFILE2.WriteLine(&xmlStr_OUT);

1. This is working.  But is there a better approach? 

2. If not, where can I write/save my XSLT to use via PeopleCode?  It is getting pretty big.  I tried in an HTML object, but one cannot reference an HMLT Object within an App Engine processes.